Loan restructuring, one-time settlement, mortgage: How Sheikh Imran and J&K Bank together siphoned off crores

Loan restructuring, one-time settlement, mortgage: How Sheikh Imran and J&K Bank together siphoned off crores

Srinagar: A corruption case has been filed in Police Station Anti Corruption Bureau here in south Kashmir’s Anantnag district against Deputy Mayor Srinagar, Sheikh Imran, for fraudulently usurping subsidy of Rs 16.5 crore by showing inflated cost for establishing a cold storage plant.
A “well knit conspiracy” has also been unearthed by the Anti Corruption Bureau by which Imran managed to have his bank loan of Rs 138 crore restructured to Rs 78 crore, an official handout said. The repayment of this loan, too, was so managed that the repaid money was given as loan to a businessman to whom Imran had mortgaged his cold storage plant.
The corruption case has been registered against Imran in his capacity as Director, M/S Kehwa Square Pvt Ltd, which has its head office in Bohri Kadal Srinagar. Also accused in the case are officers of J&K Bank and other government officials.
Imran’s company has been charged with illegal appropriation of subsidy by showing inflated project cost for establishment of a cold storage (CA) plant at Lassipora, Pulwama. During verification conducted by Anti Corruption Bureau (ACB) Kashmir, it came to light that Imran had submitted a proposal/DPR to J&K Bank for establishment of CA storage under the company M/S Kehwa Square Pvt Ltd. As per the norms of Mission for Integrated Development of Horticulture (MIDH), a Joint Inspection Team (JIT) of various experts and government officials in association with Sheikh Imran conducted a spot inspection of the site.
The assessed cost of the project, at Rs 33 crore, with subsidy component calculated to Rs 16.50 crore, i.e. 50% of estimated project cost (EPC), as per the norms of Horticulture Mission for North East & Himalayan (HMNEH) States, was sent to an empowered monitoring committee of MIDH, Govt. of India, for final approval.
Subsequent to its approval, the State Government constituted a Committee which did spot inspection and physical verification and recommended release of subsidy as per norms without altering or amending the component wise value of machinery and civil works, etc.
As per norms, the subsidy component, after its release by the National Horticulture Board (NHB), was required to be kept in a separate account by the credit provider Bank in a subsidy reserve fund, with detailed terms and conditions for adjustment of the subsidy.
During the ACB inquiry it came to light that M/S Kehwa Group had 6 more business units for which Sheikh Imran had raised loan facilities/ODs (overdrafts). The liabilities on account of this loan accumulated to Rs 138 crore.
Kehwa Square Pvt Ltd, along with its sister business concerns, turned into a non-performing asset (NPA) for J&K Bank, after which Sheikh Imran sought one-time settlement with the bank authorities. The bank finally waived off liabilities of Rs 33 crore. Pursuant to this one-time settlement, M/S Kehwa Group was asked to deposit Rs 105 crore in two instalments, with the first instalment of Rs 50 crore to be paid by March 25, 2017.
The ACB inquiry further revealed that in order to usurp the subsidy component under the garb of promoting horticulture activity/ storage facility with the connivance of Horticulture Officers and Bank Officials, Sheikh Imran and his partners declared the CA Store as NPA, without paying even a single instalment to the bank. The cost of the CA project, assessed subsequently during the inquiry by ACB, was found to be much lower than the projected cost.
The ACB inquiry revealed that the “criminal design of Sheikh Imran and his partners was actually executed with the active support of Officials of J&K Bank through business unit M/S Go Fresh”, whose proprietor Nadeem Ahmad Mayar (Qasba) was roped in to seek a loan of Rs 36.10 crore with arrangement of margin money of Rs 1.90 crore. This loan was in lieu of proposed transfer of the lease/ property rights of the CA Store in Lassipora that was mortgaged in his favour.
After Nadeem Ahmad Mayar obtained the loan amount of Rs 36.10 crore, he physically took over the operation of the CA storage unit without formal transfer of assets/ liabilities in his favour. The bank authorities extended the loan facility to Mayar, the proposed buyer, on the same property which was already under hypothecation with the bank as asset of the principal borrower, M/S Kehwa Square Pvt Ltd.
Kehwa Square Pvt Ltd sought further concessions from the J&K Nank subsequent to the first OTS (One Time Settlement). The ACB inquiry found that these concessions were sought “surreptitiously” and were consented to by the bank authorities, whereby the second instalment of Rs 55 crore was further reduced to Rs 27 crore.
Thus, it came to fore that the Kehwa Group “in furtherance of a well knit conspiracy with respective government agencies and bank authorities under the garb of NPA and OTS in mutual conspiracy illegally benefitted the proprietor/s of M/S Kehwa Group with illegal appropriation of subsidy amount of Rs 16.50 crores and layering of various transactions,” the ACB inquiry found.
“It is established that the M/S Kehwa Group has got their loan of Rs 138 crores with J&K Bank restructured for an amount of Rs 78 crores and under a well knit conspiracy Sheikh Imran and partners of M/S Kehwa Square Pvt Ltd was extended with covert/ overt support by Officers of J&K Bank and Joint Inspection Team, dishonestly and fraudulently, who by abuse and misuse of their official position as public servants conferred undue pecuniary/ monetary advantage on M/S Kehwa Group of Companies thereby causing illegal appropriation of crores of rupees from State exchequer, for personal motives,” the ACB’s inquiry report has concluded.